Tuesday, January 12, 2010

Carlyle Group Goes from Control to 1% Owner of Stallion Oilfield

The Carlyle Group and its joint venture energy partner, Riverstone Holdings, invested $30 million in Stallion Oilfield Services in 2005. That grew to $122 million in 2008. It's now down to 2%, due to Stallion's bankruptcy. Note and bridge loan holders traded $543.2 million in debt for 98% of the company's equity. Carlyle and Riverstone have warrants to buy another 1% if Stallion's enterprise value reaches $750 million.

Upstream Online reported:

Stallion is projected to have an enterprise value between $533 million and $619 million.
Secured lenders will get $25 million to cover a portion of their loans and the remaining $220.9 million of loans will be reinstated, according to the plan.

That makes Carlyle and Riverstone's 2% equity stake between $6 million and $8 million. That's got to hurt. Maybe they should change the name to Gelding Oilfield Services.

Don't worry about Carlyle, they noted distressed corporate debt as a back door method for equity ownership. How many more affiliates will Carlyle lose to debt holders? How many will they gain via debt ownership?